Said to account for around 20% of GDP, Andorra’s banking sector has seen radical change over the past few years.

Historically, Andorra’s banks offered numbered accounts without shared names of record. Numbered bank accounts were especially popular for foreign residents, as it made Andorra an attractive place to park and earn income on money, away from the eyes of their government of residence.

In light of a changing world, and after briefly being listed on the OECD’s list of non-cooperative tax havens, Andorra is moving towards a model of transparency with the global economy, while aiming to maintain privacy for its residents.

Automatic Exchange of Information & Common Reporting Standard

Andorra signed on to the Declaration on Automatic Exchange of Information in Tax Matters in 2014, along with 100 other jurisdictions. The intention of this declaration is for signing jurisdictions to combat tax evasion and facilitate tax compliance by implementing the “Common Reporting Standard”.

The Common Reporting Standard, or CRS requires jurisdictions to collect appropriate financial information from their banks and other financial institutions, and exchange this information with other jurisdictions, automatically.

How Are Residents Exposed to AEOI?

Andorra’s banking privacy remains for resident bank accounts. Financial institutions are not required to share information about resident accounts to Andorran authorities.

Given the Automatic Exchange of Information is a reciprocal agreement, Andorra will receive information from other jurisdictions. Therefore residents should assume Andorran authorities will be aware of their accounts abroad.

This is positive news for residents of Andorra who declare income appropriately to the government, as it means their financial information from within the Principality should kept private.

What Information is Shared?

Information is shared on the bank accounts of non-resident individuals and entities, consisting of:

  • account number,
  • taxpayer ID number,
  • name,
  • address,
  • date of birth,
  • income (interest, dividends, insurance income, etc),
  • sale proceeds,
  • account balances, and
  • for company accounts, ultimate beneficiary owners (known as “UBOs”).

When Did Reporting Begin?

Andorran institutions began collecting information in 2017 and reporting began in 2018.

Andorra currently reports using what is known as a “Narrow Approach“.

This means its banks will only collect and share information for tax residents of jurisdictions in the Multilateral Competent Authority Agreement.

To stay up to date, keep an eye on this page.

Combined Catalyst

In 2015, Banca Privada d’Andorra, the bank known locally as “BPA”, was accused of money laundering by the US Treasury Department.

The local opinion differs somewhat to the one that was told in major press around the world.

Whatever the truth is, this scandal combined with CRS has placed significant pressure on the Andorran banking system, with due diligence and KYC process often becoming difficult for individuals and companies.

Thankfully, the worst is now over and the Andorran banking system is open for business once again.

Andorra’s Banking Privacy: Going the Way of the World

Despite a financial secrecy score of 66/100 (only 10 points below that of Switzerland), Andorra ranks 105 on the Financial Secrecy Index. This is due to the countries’ small size and impact on the global economy.

Andorra’s government and financial industry is moving towards a model of transparency without being greedy. Taxation in Andorra remains low and fair, but non-resident and resident individuals and entities must be compliant both within the boundaries of the country and abroad.

Want to learn more? Take a read of this article on Andorra’s Banking System or contact me for more information.